YEAR-AUTO 2

The proposed Voluntary Vehicle Fleet Modernisation PlanThe proposed Voluntary Vehicle Fleet Modernisation Plan (V-VMP) provides incentives worth 8-12 per cent of the cost of a new vehicle in lieu of surrendering the old ones and looks to get nearly 28 million over-11-year-old polluting veh

The proposed Voluntary Vehicle Fleet Modernisation Plan

The proposed Voluntary Vehicle Fleet Modernisation Plan (V-VMP) provides incentives worth 8-12 per cent of the cost of a new vehicle in lieu of surrendering the old ones and looks to get nearly 28 million over-11-year-old polluting vehicles off the road.

The National Green Tribunal (NGT) was also at the forefront of the fight against pollution, ordering around 1.9 lakh diesel vehicles that are more than 15 years old to be taken off. It had earlier ordered plying of diesel vehicles that are older than 10 years.

A development that disappointed the auto industry was the reduced incentive from the government on research and development.

"A huge sum of R&D expenses has been earmarked for development of technology for BS VI. However, in the Union Budget 2016-17, the benefit available on weighted deduction on R&D expenses was reduced from 200 per cent to 150 per cent from the current financial year and the entire benefit will be eliminated from 2020. This was a disappointing announcement for the industry," Dasari noted.

With an aim to make eco-friendly vehicles, he said SIAM members have been working on developing hybrid and electric vehicles in all segments ? two wheelers, cars and even buses.

"Once the market starts accepting these vehicles in large numbers and economies of scale reached, this effort should become self-sustaining and should have huge potential in not only domestic market but also exports," Dasari added.

Optimistic of the growth story of Indian automobile industry in the long term, he said: "The strong economic foundation and the current steps to combat black money would make the economy stronger and it will bounce back and so would be demand for vehicles."

Expressing similar views, Price Waterhouse Partner and auto expert Abdul Majeed said while in short to medium term the growth is not going to be consistent, the long-term perspective for the automotive industry is quite bright.

"Going forward, the government will push its agenda in bringing stricter emission, safety norms etc. The auto industry will have to cope with these changes. Hopefully, more incentives will be offered by the government on environment friendly vehicles," he said.

One of the repercussions will be that vehicles will become costlier due to extra inputs required to make them compliant with the rules.